Insights

The Hydrogen Economy’s Biggest Bottleneck

Hydrogen is often called the fuel of the future; but one simple fact remains: it is extremely difficult to store and transport. Pure hydrogen must be cooled to minus 253°C to become liquid, and even then it is far less energy dense than existing fuels.

That physical limitation is what holds back global hydrogen markets. The solution, however, may lie in a molecule we have been using for more than a century – ammonia (NH₃).

Ammonia is already traded globally at massive scale, primarily for fertilizers. It is easy to liquefy, relatively stable to transport, and can be “cracked” back into hydrogen when needed. These qualities make it the most practical carrier for green hydrogen across continents.

Why Ammonia Is the Logical Bridge

Ammonia is composed of hydrogen and nitrogen. When produced using renewable hydrogen and atmospheric nitrogen from an air separation unit, the result is green ammonia – a carbon-free chemical with vast potential.

Its appeal to investors lies in three points:

1. Proven infrastructure: ports, ships, and storage facilities already exist.

2. Dual-use potential: can be traded as fertilizer or as an energy carrier.

3. Policy momentum: Japan, South Korea, and Europe are already integrating ammonia into national energy strategies.

In short, ammonia provides the missing piece that could make hydrogen financeable at scale.

Turning Molecules into Markets

The core challenge of hydrogen is not production; it is commercialization. Electrolyzer costs are falling and renewable energy is abundant, yet the absence of a global trading mechanism keeps prices volatile and investment uncertain.

Ammonia solves this by acting as a currency for hydrogen trade. It can be produced where renewables are cheap – such as Brazil, Namibia, or Australia – and shipped to demand centers in Europe or Asia.

This dynamic allows for arbitrage between low-cost renewable regions and industrial hubs, just as crude oil once did. Over time, a liquid market for ammonia could emerge, complete with spot pricing, futures contracts, and standardized certifications.

The Investor Angle: Bankability and Scale

For investors, the appeal of green ammonia projects is clear. Unlike standalone hydrogen plants, ammonia synthesis adds bankability through product diversification and offtake flexibility.

Whereas hydrogen off-takers are still emerging, ammonia has a global customer base. This allows projects to secure financing with lower risk premiums and longer tenors.

Moreover, ammonia synthesis provides a natural “sink” for excess hydrogen production, stabilizing utilization and improving project economics.

From an investment standpoint, this positions green ammonia as the first commercially scalable leg of the hydrogen economy.

Technology and Conversion Pathways

Ammonia can be used in several ways:

• Cracked back into hydrogen for use in fuel cells or refineries.

• Directly burned in gas turbines or marine engines (with NOx control).

• Blended with fossil ammonia to reduce the carbon footprint of fertilizer production.

Each pathway opens different markets; from shipping fuel to fertilizer decarbonization. Technological progress is also accelerating. Companies are developing ammonia cracking catalysts and dual-fuel ship engines, both of which are essential for large-scale adoption.

Challenges: From Safety to Certification

No energy transition technology is without obstacles. Ammonia is toxic and requires careful handling; public acceptance will depend on strict safety standards.

Certification also matters. To qualify as “green,” ammonia must be produced from verifiable renewable hydrogen, using traceable energy inputs. Europe’s new RFNBO (Renewable Fuels of Non-Biological Origin) regulation is an important step in creating credibility and market access.

Finally, economics remain a moving target. While costs are falling, current green ammonia production still sits around $600–900 per tonne, compared to $300–400 for conventional ammonia. The gap is expected to close rapidly as renewable power prices decline and electrolyzers scale.

Global Outlook: From Niche to Mainstream

Momentum is building. Major initiatives are underway in Saudi Arabia (NEOM), Brazil, Australia, and the United Arab Emirates, where integrated hydrogen–ammonia value chains are being designed for export to Europe and Asia.

Policy support is growing too. Japan has announced plans to import millions of tonnes of clean ammonia annually, and the EU’s Hydrogen Bank is prioritizing ammonia-based projects for its early auctions.

In essence, ammonia could become the crude oil of the hydrogen era – the universal molecule that allows clean energy to flow freely across borders.

The Bottom Line

Ammonia may not be new, but its role in the energy transition is. By bridging hydrogen production, storage, and trade, green ammonia could unlock the global hydrogen market and make large-scale decarbonization economically viable.

For investors, the takeaway is simple: those who understand ammonia’s strategic importance are not just betting on a molecule – they are investing in the infrastructure of the next energy economy.